Credit-rating agencies are now backing off their threat to downgrade Illinois debt to junk status after the state’s Democratic Senate with GOP support overrode Governor Bruce Rauner’s veto of a tax increase this weekend. But bondholders beware: Politicians will happily throw them over as easily as Republicans dumped their reform principles. The three major rating agencies—Moody’s, S&P and Fitch—are constructive in highlighting fiscal deficits, but they often underestimate credit risk. Downgrades are lagging...

Source: Wall Street Journal July 05, 2017 23:26 UTC